Does the U.S. government have the authority to enforce rules designed to ensure that the Internet remains the open, dynamic platform that has spawned one of the greatest periods of technological innovation in U.S. history? That’s the question facing a federal appeals court today in a landmark case about “net neutrality,” the principle that Internet Service Providers don’t get to control what consumers do online. The outcome of the case, brought by telecom titan Verizon against the Federal Communications Commission, could have profound implications for anyone who uses the Internet, for the tech giants who have built billion dollar businesses online, and for the thousands of startups that hope to follow in their footsteps.

“Verizon vs. FCC presents a very significant historical moment,” says Susan Crawford, a tech policy expert and professor at the Benjamin N. Cardozo School of Law who served as Special Assistant to President Obama for Science, Technology, and Innovation Policy. “The question presented by the case is: Does the U.S. government have any role in ensuring ubiquitous, open, world-class, interconnected, reasonably priced Internet access?”

Crawford, who supports net neutrality, believes the answer is yes, because without such a government role, the U.S. could be at a global competitive disadvantage, particularly relative to countries in Asia that are pursuing industrial policies designed to bolster their own high-speed broadband networks. A robust, open, reasonably priced system of nationwide broadband access is crucial for the health of the American middle class, Crawford says, and that will only be possible if the government has the power to ensure open, unfettered access to the Internet.

The principle of net neutrality was enshrined in the FCC’s 2010 Open Internet order, which aims to prevent Internet service providers (ISPs) like Comcast, Verizon, and AT&T from interfering with Internet traffic or favoring their own services in order to disadvantage rivals. The main thrust of the order boils down to three rules. First, the order requires ISPs to be transparent about how they handle network congestion; second, the ISPs are prohibited from blocking traffic such as Skype or Netflix on wired networks; third, the order outlaws “unreasonable” discrimination, meaning the ISPs can’t put such services into an Internet “slow lane” in order to benefit their own competing services.

The FCC says the net neutrality rules are designed to “preserve the Internet as an open platform enabling consumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission.” Verizon argues that the FCC lacks the authority to enforce the rules, which the telecom giant also claims violate its First Amendment rights to free speech.

For nearly a decade, net neutrality has been the subject of an intense series of battles among ISPs, Internet giants, consumer groups, policy experts, and the FCC itself. Today, the Internet largely adheres to net neutrality, and most people don’t even think about it, so it’s easy to take for granted. All Internet users have open access to the Internet, just like all Americans have the right to travel anywhere in the 50 states without a passport. Without this open access, net neutrality advocates argue, startups like Google, Twitter and Facebook could never have flourished.

Cable and telecom giants have traditionally argued that because they spent billions of dollars to build the infrastructure underlying the Internet, they should have more latitude in deciding what content travels over those networks. Net neutrality, they’ve argued in the past, allows companies like Google, Yahoo and Facebook to make billions of dollars using the “pipes” and wireless networks that the cable and telecom giants spent billions to build. In 2005, incoming AT&T CEO Ed Whitacre famously remarked that upstarts like Google would like to “use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it.”

In the latest case, Verizon argues that the FCC lacks the authority to enforce net neutrality because, it claims, Congress did not grant the agency the ability to do so. In essence, Verizon says that the FCC overstepped its authority with the Open Internet rules, and is asking the U.S. Court of Appeals for the District of Columbia Circuit to agree. “The FCC has acted without statutory authority to insert itself into this crucial segment of the American economy, while failing to show any factual need to do so,” Verizon argues in its brief to the court.

For its part, the FCC argues that it has the authority to enforce net neutrality under provisions of the Telecommunications Act of 1996 and the Communications Act of 1934. The FCC’s position received a boost in May when the U.S. Supreme Court ruled in a separate case that regulatory agencies should be granted leeway in applying their own rules. “The court must defer to the administering agency’s construction of the statute so long as it is permissible,” Justice Antonin Scalia wrote in a 6-3 decision.

Verizon further argues that the net neutrality rules violate the company’s First Amendment rights. Because broadband companies transmit their own speech as well as the speech of others, the providers “possess ‘editorial discretion,'” Verizon asserts. “Just as a newspaper is entitled to decide which content to publish and where, broadband providers may feature some content over others,” the telecom giant argues. “Although broadband providers have generally exercised their discretion to allow all content in an undifferentiated manner, they nonetheless possess discretion that these rules preclude them from exercising. For example, they could distinguish their own content from that of other speakers or offer that capability to others.”

Net neutrality advocates reject Verizon’s attempt to turn government oversight over broadband service into a constitutional issue about free speech. “In its capacity as a broadband provider, Verizon is not a speaker but a conduit for others’ speech,” Kevin Bankston, lead attorney for the Center for Democracy and Technology, wrote in a brief supporting the FCC. “A broadband provider is no more the publisher or speaker of third-party content than is the postal service delivering letters or the maker of the soapbox on which a speaker stands.”

Verizon’s position is hypocritical, according to the CDT andothers, because the company previously argued that it is merely a passive conduit — protected by the “safe harbor” provisions of the 1998 Digital Millennium Copyright Act — for legally questionable content like unauthorized music and movies that travels over its network. “Verizon cannot have it both ways,” Bankston wrote. “It cannot be a speaker when it suits its purposes and a conduit when it does not. Either Verizon is expressing itself by its choice to transmit certain content, or it is a passive conduit for the expression of others.”

To Susan Crawford, Verizon’s First Amendment argument is insidious because it suggests an equivalence between the kind of speech that is protected by the Constitution, and the business of transporting data on broadband networks. That’s wrong, she says. “Verizon is free to speak anytime it wants to about anything,” says Crawford. “Merely allowing other people’s speech to cross its lines does not amount to compelled speech. Indeed, the First Amendment, and its great tradition of cases protecting dissent and press freedom, is demeaned by Verizon’s argument.”

“use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it.” Dear Mr. Whitacre, you do get a return on it. You charge me through the nose for that tube,a tube that is slow as hell and you have a virtual monopoly on it as in my area I have one internet provider.

Broadband providers didn't apply as content providers when they received over $100M from the Connect America Fund to build out Broadband, did they? Verizon has chosen not to receive CAF funds -- clearly as a way to bolster
their position against net neutrality, though, interesting to note, in 2010,
they did take $1.5Bn in a government bailout during the financial crisis. Based on Verizon's argument -- if they are content providers -- it could be argued that FedEx and even our US postal system would possess as much ‘editorial discretion' (a/k/a censorship) as a result of the fact that their trucks and planes transport content. And come on guys -- there was no such thing as the Internet in 1934 so please stop referring to that antiquated document as it pertains to broadband services.

I can understand the telcom giants making the calim that they have helped to lay down the network that supports high speed access and they need compensation for that; BUT they are really just being petty about the issue so they can continue to control their respective massive market shares and control advertising within them.

Yes, in my opinion, Verizon is the best telecom provider out there, but everyone knows that it could be so much better -- with minimal amount of extra effort on the company's part. Faster access and FAIR access would help motivate the millions of every-day innovators in this country to do more and share more on the internet.

@ROBSchwab Rob the overall issue here is. They are compensated for it. The US charges more on average for internet access than the rest of the world does not to mention a lot of the time you need a basic tv package on top of it to get "proper" access. We also have slower internet speeds, regional monopolies and a whole slew of other problems. RCN is a far better ISP than verizon just based on their actions in the internet space and they are a small company who has continually build out their networks. Verizon, AT&T, etc all need to be split up into smaller ISP's that expand networks (small being lets say operating in 6 - 10 areas tops...) We would see a lot more innovation and spread of the internet if twe had a bunch of small companies instead of a few large ones and maybe a tiny handful of very smaller ISP providers.

Remember there is a reason Ma Bell (Verizon and AT&T) was split up back in the day and now we are having the same exact problems just regionally..

@ROBSchwab You do realize these companies were handed gigantic grants to lay these pipes don't you? They have made billions from this investment from customers paying for internet access and they were not the only ones laying pipes the past few decades. Do you think Verizon is going to pay back tax payers for the money the government has invested in infrastructure? Hell no.

They are ISPs- not content providers. If they cannot keep up with demands of the market they need to get the hell out of the business.

This smacks of the now defunct early ISPs who screamed to every business magazine and tv show that the future of ISP pay structure would be charging by the bit. Smaller companies came up and slapped these horrid business ideas into the dirt.

Verizon has crossed the line of being worse than AT&T. We need to publicly humiliate their corporate leaders personally and professionally as examples of indecent and vile business leaders. My God, they are like cartoon villains they are so transparent.

@DanKleinman Net Neutrality is not even a free speech issue for companies. In fact without it it would allows companies (verizon comcast etc) to impede on our First Amendment rights by blocking what we have access to without pay... They would be free to pick and choose what we are allowed to access, what they want us to pay for etc. No ISP should also be a content provider and if they are that needs to be handled as a wholly separate entity entirely. You don't get to combine the fact that you are a content provider and an ISP to impede on people's access to the internet at large in order to make more profit. I guarantee you they will attempt to charge by the bit, start charging for access to certain sites, start charging for access to certain programs (skype or anything like that), and stat charging for packet prioritization for things like netflix and gaming...

Net neutrality is a necessity in a greedy corporate world so the consumer doesn't get flat out shafted. If these companies don't want net neutrality they should be subjected to being split up and only being allowed to operate in a few markets and making sure that some of those markets directly overlap with any competition without an ability to expand beyond a certain amount of markets. As is they have HUGE regional monopolies that getting rid of net neutrality would shaft pretty much everyone not on a smaller ISP

@DanKleinman Well that is one group saying this. It does not change the net neutrality hurts no one, it helps consumers and companies like Verizon and Comcast want to do away with it for purely selfish reasons.

This is why they always go after the lawyers first in rebellions. God what horrible human beings they are. Just really, really bad people at Verizon.